EXHIBIT 10.3
LICENSING AGREEMENT
THIS LICENSING AGREEMENT (the "Agreement") is entered into effective
November 15, 2004, between ORTHONETX, INC., a Nevada corporation, and XXXXX
XXXXX, M.D. ("Xxxxx"). OrthoNetx, Inc. and its subsidiary corporations are
hereinafter referred to as "ORTHONETX."
EXPLANATORY STATEMENT
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A. ORTHONETX is a medical device company that is currently developing
and marketing certain distraction osteogenesis devices and plans to create and
incorporate an Interactive Bone Information System ("IBIS") and an Interactive
Device Information System ("IDIS") (IBIS and IDIS collectively, "IBIS/IDIS") for
use in conjunction with its medical devices.
X. Xxxxx has developed certain proprietary technology included in U.S.
Patent 6,278,999 entitled "Information Management System for Personal Health
Digitizers" (the "Xxxxx Patent") for an information management system that can
be utilized in ORTHONETX's IBIS/IDIS.
X. Xxxxx desires to license its Xxxxx Patent to ORTHONETX for
incorporation in ORTHONETX's IBIS/IDIS and for ORTHONETX's use of the Xxxxx
Patent in the field of medical device implants as addressed by the IBISIIDIS
platform.
NOW THEREFORE, in consideration of the foregoing Explanatory Statement,
which is made a substantive part of this Agreement and the promises, covenants
and representations made herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is agreed as
follows:
ARTICLE 1
TERM
1.1 TERM. This Agreement shall become effective upon execution and
shall continue in full force and effect for five (5) years, unless sooner
terminated in accordance with its terms. This Agreement shall be renewed
automatically for additional five (5) year terms at the expiration of each
preceding term unless ORTHONETX notifies Xxxxx, in writing, within thirty (30)
days prior to the renewal date, that it elects not to renew.
1.2 PRIOR TERMINATION. Anything contained in Section 1.1 above to the
contrary notwithstanding, this Agreement may be terminated and the obligations
of the parties hereunder shall thereupon cease, upon the occurrence of the
following:
(a) Xxxxx may elect to terminate this Agreement by providing
ORTHONETX with ninety (90) days notice in writing in the event ORTHONETX fails
to substantially perform its duties hereunder. ORTHONETX shall have the right to
cure such non-performance within ninety (90) days of such Default Notice and if
ORTHONETX cures such non-performance within the ninety (90) day period, this
Agreement shall remain in full force and effect.
(b) Xxxxx may also elect to terminate this Agreement by
providing ORTHONETX with ninety (90) days notice in writing if ORTHONETX,
through its board of directors, does not utilize the Xxxxx Patent in conjunction
with any of its medical devices or fails to sublease the Xxxxx Patent in
accordance with this Agreement within two (2) years of the date of this
Agreement.
ARTICLE 2
LICENSE OF ICNAPP PATENT
2.1 LICENSING. In consideration of the payments to be made in
accordance with this Agreement, Xxxxx hereby grants to ORTHONETX an exclusive,
transferable (with the right to sublicense) license to use the Xxxxx Patent in
relation to the development, manufacturing, marketing and servicing of medical
device implants as addressed by the IBIS/IDIS platform in the United States and
worldwide. The license rights shall include the right to use and further develop
technology included in the Xxxxx Patent for use in its IBIS/IDIS platform.
2.2 LICENSE RESTRICTIONS. Except as otherwise expressly authorized in
writing by Xxxxx, ORTHONETX shall not use the Xxxxx Patent other than in
accordance with the provisions of this Agreement.
2.3 DURATION. This Agreement and the licenses hereby granted shall
commence on the date of counter-signature by Xxxxx of this Agreement and shall
continue in force for the term as set forth in Article 1.
2.4 OWNERSHIP OF THE XXXXX PATENT.
(a) XXXXX PATENT OWNER. Xxxxx is the owner of the Xxxxx
Patent. Xxxxx is not aware at the date hereof that the Xxxxx Patent or the use
of it in relation to the field of medical device implants as addressed by the
IBISIIDIS platform infringes the rights of any third party but gives no warranty
in relation thereto, nor as to the validity of any applications.
(b) REPRESENTATIONS AS TO XXXXX PATENT. Xxxxx represents that
the Xxxxx Patent is a valid patent as filed and registered with the U.S. Patent
Office.
(c) NO WARRANTY. THE XXXXX PATENT IS PROVIDED TO ORTHONETX "AS
IS" AND WITHOUT WARRANTY OF ANY TYPE OR KIND. XXXXX HEREBY DISCLAIMS ANY AND ALL
WARRANTIES, WHETHER STATUTORY, EXPRESS, OR IMPLIED, INCLUDING WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY FOR A PARTICULAR PURPOSE,
AND ANY WARRANTY OF NON-INFRINGEMENT OF THIRD PARTY RIGHTS EXCEPT THAT XXXXX
WARRANTS ONLY THAT THE XXXXX PATENT IS A VALID PATENT AS FILED AND REGISTERED
WITH THE U.S. PATENT OFFICE AND THAT HE IS NOT AWARE AT THE DATE HEREOF OF ANY
THIRD PARTY CLAIM THAT THE XXXXX PATENT OR THE USE OF IT ON OR IN RELATION TO
MEDICAL IMPLANT DEVICES INFRINGES THE RIGHTS OF SUCH THIRD PARTY OR PARTIES.
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(d) NO CONTEST TO XXXXX PATENT. During the term of this
Agreement and thereafter, ORTHONETX undertakes not to do or permit to be done
any act which would or might jeopardize or invalidate the Xxxxx Patent, nor any
application and/or registration thereof, nor do any act which might prejudice
the right of Xxxxx to the Xxxxx Patent. Furthermore, ORTHONETX will not object
to or otherwise contest Xxxxx'x exclusive right, title and interest in and to,
or the validity of, the Xxxxx Patent, subject to this Agreement.
(E) ORTHONETX ASSISTANCE IN MAINTAINING XXXXX PATENT ORTHONETX
shall on request give to Xxxxx or its authorized representative any information
as to its use of the Xxxxx Patent which Xxxxx may reasonably require.
2.5 INFRINGEMENTS.
(a) INFRINGEMENTS OF THE XXXXX PATENT. ORTHONETX shall
immediately notify Xxxxx in writing if ORTHONETX becomes aware of any
unauthorized use, or proposed unauthorized use, by any person of a possible
infringement of the Xxxxx Patent, and grants ORTHONETX the right to take such
action, at ORTHONETX's own expense, and by attorneys of ORTHONETX's choice, as
ORTHONETX in its sole discretion may deem advisable, including the right to xxx
for infringement of ORTHONETX's license rights pursuant to this Agreement. Any
such action taken by ORTHONETX may be taken in the name of Xxxxx or ORTHONETX,
as ORTHONETX deems appropriate. The monetary proceeds from any such action,
claim or settlement arising from any such action, will belong exclusively to
ORTHONETX after the deduction of all of Xxxxx'x own costs incurred as a result
of such proceedings, if any.
(b) XXXXX PATENT INFRINGEMENT. If either party or their
subsidiaries receive notice (the "Infringement Notice") from any third party
alleging that the Xxxxx Patent infringes upon any third party's patent or
technology, then such party receiving the Infringement Notice shall immediately
notify the other party and all parties hereto and their subsidiaries will
mutually decide what action shall be taken in response to the claim of
infringement.
(c) COOPERATION. Each party shall, at the request of the other
party, cooperate with each other in any action, claim or proceedings brought or
threatened in respect of the Xxxxx Patent as licensed to ORTHONETX pursuant to
this Agreement.
2.6 FEES. AS full consideration for its license rights pursuant to this
Agreement, ORTHONETX agrees to the following:
(a) ORTHONETX, beginning two years from the date of this
agreement, will pay Xxxxx a royalty of two percent (2%) of the net income, as
determined by generally accepted accounting principals applied by ORTHONETX's
certified public accountants, received by ORTHONETX from the sale of any of its
devices that use the Xxxxx Patent in its medical devices as addressed by the
ORTHONETX's IDIS/IBIS system.
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(b) If ORTHONETX creates a business on sublicensing, servicing
or selling IBISIIDIS utilizing the Xxxxx Patent to other medical device
manufacturers, ORTHONETX will pay Xxxxx a royalty of two percent (2%) of the net
income, as determined by generally accepted accounting principals applied by
ORTHONETX's certified public accountants, received by ORTHONETX based on such
business activities.
2.7 SURVIVAL OF RIGHTS AND OBLIGATIONS UPON TERMINATION. All provisions
of this Agreement which in order to give effect to their meaning need to survive
its termination shall remain in full force and effect thereafter.
2.8 CONFIDENTIALITY.
(a) CONFIDENTIAL INFORMATION. ORTHONETX shall, except where a
provision of the Agreement provides otherwise, maintain in confidence all
information disclosed to it under or in relation to this Agreement by Xxxxx,
which is in writing marked "confidential" or, if oral or visual, is identified
as confidential at the time of disclosure and reduced to writing marked
"confidential" and sent to ORTHONETX within thirty (30) days thereafter, and
shall not use any such information except for the purposes of this Agreement.
ORTHONETX's obligations under this subclause shall be limited to taking such
steps as it ordinarily takes to preserve the most important of its own
confidential information. Notwithstanding the foregoing, ORTHONETX may disclose
the basic terms of this Agreement in any private placement offering of its
securities or any filing with the Securities and Exchange Commission (the "SEC")
and may also include this Agreement as an exhibit to any filings with the SEC if
required by applicable law or regulations.
(b) NON-CONFIDENTIAL INFORMATION. The obligations of
non-disclosure and non-use set out above shall not apply to any item of
information which: (a) is in the public domain at any time (but without
prejudice to any person's rights of action against another person who wrongfully
causes or permits such information to be in the public domain); (b) was
rightfully in a person's possession without obligation of confidence prior to
its disclosure pursuant to this Agreement, or is subsequently independently
developed by that person by employees having no access to the information
disclosed hereunder; (c) is subsequently rightfully obtained without obligation
of confidence by a person from a source other than ORTHONETX as evidenced by
written records, or (d) is required to be disclosed by order of any court of
competent jurisdiction or to enable the Xxxxx Patent or any license thereunder
to be validly registered, PROVIDED that no right or interest under any license,
patent, or otherwise shall be acquired by the recipient of any information by
virtue of the application of this section.
(c) SURVIVAL OF CONFIDENTIALITY OBLIGATIONS. The obligations
of non-disclosure and the limitations on use, set out above, shall survive
termination of this Agreement.
2.9 CONTINGENCY. This Agreement and the obligations of the parties
herein are expressly subject to and contingent upon the completion of the
minimum funding of the ORTHONETX financing pursuant to the ORTHONETX Private
Placement Memorandum of November, 2004. If such financing or alternative is not
completed within four (4) months of the date of this Agreement, this Agreement
shall be null and void.
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ARTICLE 3
GENERAL CONDITIONS
3.1 ADDITIONAL ACT OR DOCUMENTATION. Xxxxx and ORTHONETX agree to make,
execute, and deliver such additional documents and instruments and take such
actions as may be necessary or appropriate to carry out the full intent and
purpose of this Agreement.
3.2 NOTICES. Any notices that may be required under this Agreement
shall be in writing, shall be effective on the earlier of the date when received
or the third day following mailing, and shall be given by personal service, or
by certified or registered mail, return receipt requested, to the addresses set
forth below, or to such other addresses as may be specified in writing to all
parties hereto.
3.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors in
interest, but in no event shall any party be relieved of its obligations
hereunder without the express written consent of each other party except as
expressly provided herein.
3.4 SEVERABILITY. To the full extent possible, each provision of this
Agreement shall be interpreted in such fashion as to be effective and valid
under applicable law. If any provision of this Agreement is declared void or
unenforceable with respect to particular circumstances, such provision shall
remain in full force and effect in all other circumstances. If any provision of
this Agreement is declared void or unenforceable, such provision shall be deemed
severed from this Agreement, which shall otherwise remain in full force and
effect.
3.5 COUNTERPARTS AND FACSIMILE SIGNATURE. This Agreement may be
executed in any number of counterparts, all such counterparts shall be deemed to
constitute one and the same instrument, and each of the executed counterparts
shall be deemed an original hereof. A facsimile signature shall be deemed an
original for all purposes.
3.6 GOVERNING LAW. This Agreement shall be deemed to be made under, and
shall be construed in accordance with and shall be governed by, the internal
laws of the United States of America and the State if Colorado. Suit to enforce
any provision of this Agreement or to obtain any remedy with respect hereto
shall be brought in District Court for the County of Arapahoe, or Federal
District Court in Denver, Colorado, and each party hereto expressly and
irrevocably consents to the jurisdiction of said court.
3.7 ENTIRE AGREEMENT; CAPTIONS. THIS Agreement and the agreements
referenced herein contain the entire agreement and understanding of the parties
with respect to the subject matter hereof, and all prior agreements and
understandings of the parties with respect to such subject matter are hereby
superseded. No representations, promises, agreements, or understandings not
contained in this Agreement regarding the subject matter hereof shall be of any
force or effect unless in writing, executed by the party to be bound and dated
on or subsequent to the date hereof. Captions and headings are for convenience
only and shall not alter any provision or be used in construing this Agreement.
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3.8 TIME. Time is of the essence of this Agreement and each and every
provision hereof Any extension of time granted for the performance of any duty
under this Agreement shall not be considered an extension of time for the
performance of any other duty under this Agreement.
3.9 GENDER AND NUMBER. Wherever from the context it appears
appropriate, each item stated in the singular shall include the plural and vice
versa, and the masculine, feminine, or neuter form shall include the masculine,
feminine, and neuter forms.
3.10 MODIFICATIONS AND WAIVERS. No change, modification, or waiver of
any provision of this Agreement shall be valid or binding unless it is in
writing dated after the date hereof and signed by the parties intended to be
bound. No waiver of any breach, term or condition of this Agreement by either
party shall constitute a subsequent waiver of the same or any other breach,
term, or condition or a continuing waiver after demand for strict compliance.
3.11 ADVISEMENT OF REPRESENTATION. The law firm of Xxxxxxx X. Xxxxxx
has assisted in drafting this Agreement and has done so at the request of its
client, ORTHONETX (the "Client"). Xxxxxxx X. Xxxxxx, Esq. represents only its
Client and no other person or entity in this transaction.
3.12 NOTICES. For all purposes of this Agreement, unless changed by
written notice, the mailing addresses of the parties shall be:
ORTHONETX's Notice Address: Xxxxx'x Notice Address:
0000 X. Xxxxxxxxxx Xxxx., #000 0000 X. 00xx Xxxxxx
Xxxxxx, XX 00000-0000 Niwot, CO 80503
This Agreement is entered into effective the date first written above.
ORTHONETX: Xxxxx:
ORTHONETX, Inc.
By: /s/ Xxxxxxxx Xxxxxxxx /s/ Xxxxx Xxxxx
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Xxxxxxxx Xxxxxxxx, M.D., D.D.S. Xxxxx Xxxxx, Chairman
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